Transcript Impact of Global Warming on Insurance Lawyers and Their Clients

THE IMPACT OF GLOBAL WARMING ON
INSURANCE LAWYERS AND THEIR CLIENTS
Board of Marine Underwriters of San Francisco
May 6 & 7, 2010
AVAILABLE AT
Climateofuncertainty.com
Amazon.com
Bill Stewart |Cozen O'Connor
200 Four Falls Corporate Center | Suite 400 | West Conshohocken, PA 19428
P: 610.941.2380 | F: 866.776.8917 | [email protected]
© 2009 Cozen O’Connor. All Rights Reserved.
550 Attorneys • 24 Offices • www.cozen.com
“Climate Claims Are the New Asbestos”
National Underwriter (May 29, 2009)
© 2009 Cozen O’Connor. All Rights Reserved.
550 Attorneys • 24 Offices • www.cozen.com
How Climate Change Will Effect Insurers
1) Physical Manifestations of a Warmer World
2) Financial Injury (including litigation) Caused By
Governmental Legislation
3) Disclosures to Regulatory Bodies
4) New Insurance Products and Markets
© 2009 Cozen O’Connor. All Rights Reserved.
550 Attorneys • 24 Offices • www.cozen.com
How Climate Change Will Effect Insurers
1) Physical Manifestations of a
Warmer World
© 2009 Cozen O’Connor. All Rights Reserved.
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© 2009 Cozen O’Connor. All Rights Reserved.
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Water Vapor
Reflecting
Heat
Warm Air Trapped
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Expectations Agreed Upon By the International
Panel on Climate Change
–
–
–
–
–
–
Rise In Temperatures
Increased Storms
Higher Sea Levels
Widespread Increase in Flooding
Aggravated Water Scarcity
Increased Range of Malaria Carrying
Mosquitoes
– Large Scale Famine
– Massive Population Movement
– Would Likely Provoke Armed Conflict
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Public Nuisance Litigation
• Comer v. Murphy Oil, USA, et al.
– U.S. District Court for the Southern District of Mississippi
• California v. General Motors Corp.
– U.S. District Court for the Northern District of California
• Connecticut v. American Electric Company,
Inc.,
– U.S. District Court for the Southern District of New York
• Native Village of Kivalina v. ExxonMobil Corp.
– U.S. District Court for the Northern District of California
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Comer v. Murphy Oil, USA, et al., U.S. District
Ct., Southern District Of Mississippi
• Claims:
– Residents and property owners assert public and
private nuisance claims against oil, coal and chemical
company defendants, alleging defendants
contributions to global warming fostered the
strengthening of Hurricane Katrina.
• 5th Circuit Finding:
– On October 16, 2009, the Court of Appeals reversed
the Federal District Court, holding plaintiffs claims do
not present nonjusticiable political questions
– Rehearing En Banc Granted - May 24, 2010
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Connecticut v. American Electric Power Co., U.S.
District Ct., Southern District of New York
• Claims:
– Plaintiffs, various states and environmental groups sought to
abate the “public nuisance of global warming” alleging
defendants contributed to elevated levels of CO2 beach erosion,
droughts, and floods.
• 2nd Circuit Finding:
– On September 21, 2009 the Court of Appeals reversed the
Federal District Court, holding (1) public nuisance claims against
greenhouse gas emitters do not present nonjusticiable political
questions; and (2) private organizations have standing, upon a
showing of injury different in kind from the public at large, to
pursue litigation.
– Rehearing En Banc Denied – March 5, 2010
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California v. General Motors Corp., U.S. District
Ct., Northern District of California
• Claims:
– State of California sued six automakers alleging their
emission of CO2 and other greenhouse gases from
the combustion of fossil fuels, caused millions of
dollars of damage to the State.
• Voluntary Dismissal:
– The State voluntarily moved to dismiss it’s appeal,
citing to the Obama Administration’s public
acknowledgement that greenhouse gases.
© 2009 Cozen O’Connor. All Rights Reserved.
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© 2009 Cozen O’Connor. All Rights Reserved.
550 Attorneys • 24 Offices • www.cozen.com
© 2009 Cozen O’Connor. All Rights Reserved.
550 Attorneys • 24 Offices • www.cozen.com
Native Village of Kivalina v. ExxonMobil Corp.
• Federal District Court Finding:
– On September 30, 2009, the Federal District Court
dismissed plaintiffs claims against the power
companies based upon the attenuated nature of the
causal link between the claimed injuries and any
particular defendants’ conduct, and on the basis that
the regulation of greenhouse gas emissions was an
issue best left to the political branches of government.
• 9th Circuit
– Appeal pending (Briefing Stage)
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Professional Liability Exposure
1) Architects & Engineers
2) Brokers, Lawyers, Fiduciaries & Others
3) Foreseeability Issue
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Coverage Litigation
Steadfast Ins. Co. v. AES Corporation
• Virginia Circuit Court entered judgment in
favor of Steadfast Ins. Co. holding that it has
no obligation to defend or indemnify AES in
Native Village of Kivalina v. ExxonMobil Corp.
• Status: Appeal Pending before Virginia
Supreme Court
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Coverage Issues Presented Under CGL
Policies By Public Nuisance Suits
•Occurrence, Fortuity & Known Loss
•Trigger & Loss in Progress
•Pollution Exclusion
•Allocation Among Policy Periods
© 2009 Cozen O’Connor. All Rights Reserved.
550 Attorneys • 24 Offices • www.cozen.com
How Climate Change Will Effect Insurers
1) Physical Manifestations of a Warmer World
2) Financial Injury (including
litigation) Caused By Government
Legislation
© 2009 Cozen O’Connor. All Rights Reserved.
550 Attorneys • 24 Offices • www.cozen.com
Important UN Climate Change Conferences
• Rio de Janeiro (Earth Summit) (1992)
• The Kyoto Protocol on Climate Change (COP-3)
(1997)
• Bali, Indonesia (COP-13) (2007)
• Poznan, Poland (COP-14) (2008)
• Copenhagen, Denmark (COP-15) (2009)
© 2009 Cozen O’Connor. All Rights Reserved.
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Cap and Trade Legislation
• Clean Energy Jobs and American Power Act
– “A bill to create clean energy jobs, promote energy
independence, reduce global warming pollution, and transition to
a clean energy economy.”
– Senate – S.1733 (Kerry/Boxer)
– Introduced in Senate on September 30, 2009
• American Clear Energy and Security Act of 2009
– “A bill setting forth provisions concerning clean energy, energy
efficiency, reducing global warming pollution, transitioning to a
clean energy economy, and providing for agriculture and forestry
related offsets.”
– House – H.R. 2454 (Waxman/Markey)
– Passed House on June 26, 2009
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© 2009 Cozen O’Connor. All Rights Reserved.
550 Attorneys • 24 Offices • www.cozen.com
Reducing Fossil Fuel Demand
• Energy Conservation
– recycling, carpooling, adjusting thermostat,
turning lights off
• Energy Efficiency
– insulation, energy rated appliances,
fluorescent light bulbs, smart grid technology
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© 2009 Cozen O’Connor. All Rights Reserved.
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Wind
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Solar
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Hydrogen
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Nuclear
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Geothermal
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Biofuels
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Hydroelectric
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Wave and Tidal
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Carbon Sequestration
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Climate Change Litigation
Existing
• Regulatory Inaction
– Suits to compel government action
• Public Nuisance
– Tort claims
Future
• Professional Liability
• Shareholder Derivative Actions
• Regulatory “Cap and Trade” Compliance
• Coverage Litigation
© 2009 Cozen O’Connor. All Rights Reserved.
550 Attorneys • 24 Offices • www.cozen.com
How Climate Change Will Effect Insurers
1) Physical Manifestations of a Warmer World
2) Financial Injury (including litigation) Caused By
Government Legislation
3) Disclosures to Regulatory
Bodies
© 2009 Cozen O’Connor. All Rights Reserved.
550 Attorneys • 24 Offices • www.cozen.com
Climate Change Risk
Disclosure Requirement
1) SEC
• No specific “climate” disclosure
requirements
2) National Association of Insurance
Commissioners
• “Climate Risk Disclosure Survey”
© 2009 Cozen O’Connor. All Rights Reserved.
550 Attorneys • 24 Offices • www.cozen.com
NAIC Climate Risk Disclosure Requirements
1.
2.
3.
4.
5.
6.
7.
8.
Does the company have a plan to assess, reduce or mitigate its emissions
in its operations or organizations? If yes, please summarize.
Does the company have a climate change policy with respect to risk
management and investment management? If yes, please summarize. If
no, how do you account for climate change in your risk management?
Describe your company’s process for identifying climate change-related
risks and assessing the degree that they could affect your business,
including financial implications.
Summarize the current or anticipated risks that climate change poses to
your company. Explain the ways that these risks could affect your
business. Include identification of the geographical areas affected by
these risks.
Has the company considered the impact of climate change on its
investment portfolio? Has it altered its investment strategy in response to
these considerations? If so, please summarize steps you have taken.
Summarize steps the company has taken to encourage policyholders to
reduce the losses caused by climate change-influenced events.
Discuss steps, if any, the company has taken to engage key
constituencies on the topic of climate change.
Describe actions your company is taking to manage the risks climate
change poses to your business including, in general terms, the use of
computer modeling.
© 2009 Cozen O’Connor. All Rights Reserved.
550 Attorneys • 24 Offices • www.cozen.com
NAIC Climate Risk Disclosure
Requirements
1.
2.
3.
4.
5.
6.
7.
8.
Does the company have a plan to assess, reduce or mitigate its emissions
in its operations or organizations? If yes, please summarize.
Does the company have a climate change policy with respect to risk
management and investment management? If yes, please summarize. If
how do you account
climate change in process
your risk management?
3.no,Describe
yourforcompany’s
for
Describe your company’s process for identifying climate change-related
risks
and assessing the
degree that
they could affect your business,
identifying
climate
change-related
risks
including financial implications.
and assessing
the degree
they
Summarize
the current or anticipated
risks thatthat
climate
changecould
poses to
your company. Explain the ways that these risks could affect your
business.
Include
identification
of the including
geographical areas
affected by
affect
your
business,
financial
these risks.
implications.
Has
the company considered the impact of climate change on its
investment portfolio? Has it altered its investment strategy in response to
these considerations? If so, please summarize steps you have taken.
Summarize steps the company has taken to encourage policyholders to
reduce the losses caused by climate change-influenced events.
Discuss steps, if any, the company has taken to engage key
constituencies on the topic of climate change.
Describe actions your company is taking to manage the risks climate
change poses to your business including, in general terms, the use of
computer modeling.
© 2009 Cozen O’Connor. All Rights Reserved.
550 Attorneys • 24 Offices • www.cozen.com
NAIC Climate Risk Disclosure
Requirements
1.
2.
3.
4.
5.
6.
7.
8.
Does the company have a plan to assess, reduce or mitigate its emissions
in its operations or organizations? If yes, please summarize.
Does the company have a climate change policy with respect to risk
management and investment management? If yes, please summarize. If
no, how do you account for climate change in your risk management?
Describe your company’s process for identifying climate change-related
risks
and assessing thethe
degree
that they could
affect your business,
4.
Summarize
current
or
anticipated
risks
including financial implications.
that climate
to your
Summarize
the current change
or anticipatedposes
risks that climate
change poses to
your company. Explain the ways that these risks could affect your
business.
Include identification
ofthe
the geographical
areasthese
affected by
company.
Explain
ways
that
risks
these risks.
Has
the company
considered
impact of climateInclude
change on its
could
affect
yourthebusiness.
investment portfolio? Has it altered its investment strategy in response to
these
considerations? If so,
steps you have
taken.
identification
ofplease
the summarize
geographical
areas
Summarize steps the company has taken to encourage policyholders to
reduce
the lossesby
caused
by climate
change-influenced events.
affected
these
risks.
Discuss steps, if any, the company has taken to engage key
constituencies on the topic of climate change.
Describe actions your company is taking to manage the risks climate
change poses to your business including, in general terms, the use of
computer modeling.
© 2009 Cozen O’Connor. All Rights Reserved.
550 Attorneys • 24 Offices • www.cozen.com
How Climate Change Will Effect Insurers
1) Physical Manifestations of a Warmer World
2) Financial Injury (including litigation) Caused By
Governmental Legislation
3) Disclosures to Regulatory Bodies
4) New Products and Markets
© 2009 Cozen O’Connor. All Rights Reserved.
550 Attorneys • 24 Offices • www.cozen.com
New Products
1) Pay as you go auto
2) Green upgrade
3) Crop insurance and other climate-related micro
insurance
4) D & O Extension
5) Carbon captive and storage
6) Growing Renewable Energy Market
© 2009 Cozen O’Connor. All Rights Reserved.
550 Attorneys • 24 Offices • www.cozen.com
THE IMPACT OF GLOBAL WARMING ON
INSURANCE LAWYERS AND THEIR CLIENTS
Board of Marine Underwriters of San Francisco
May 6 & 7, 2010
AVAILABLE AT
Climateofuncertainty.com
Amazon.com
Bill Stewart |Cozen O'Connor
200 Four Falls Corporate Center | Suite 400 | West Conshohocken, PA 19428
P: 610.941.2380 | F: 866.776.8917 | [email protected]
© 2009 Cozen O’Connor. All Rights Reserved.
550 Attorneys • 24 Offices • www.cozen.com